Is FBMKLCI oversold?

On 14th November 2016, the FBM KLCI declined 17.55 points or 1.1% on expectation that US President-elect Donald Trump’s expansionary fiscal plans for the US economy will lead to higher inflation and interest rates there. Higher US interest rates do not bode well for Asian markets in anticipation that investors will shift their money into US dollar-denominated assets. At 5pm, the KLCI closed at 1,616.64 points. Read More

The KLCI’s 17.55-point drop today followed an 18.55-point fall last Friday (Nov 11). Are we looking at a possible oversold position of FBMKLCI?

ta_fbmklci

The above technical analysis appears to suggest that FBMKLCI is currently in a potential oversold position:

  • Breach of lower-band of Bollinger Band
  • 14-period RSI < 30%
  • William R% <-80
  • MACD – bearish sentiment (no positive reversal is seen yet)

There may be potential trading range between 1,616 (possible support line) and 1,652 (possible resistance line). Stronger resistance is based on 200D-moving average line. Based on a selected FBMKLCI-structured call warrant, assuming that FBMKLCI rebounds back to 1,650 (as of 1 Dec 2016) , we may anticipate the FBMKLCI-C1A instrument to trade between RM0.058 – RM0.065 (a narrower range).

C1A Warrant.png

A previous article briefly touches on structured call/ / put warrants (with underlying FBMKLCI) – Read More

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Author: Ken Utau

Markets Observer + Food Lover

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